Healthcare costs have become a significant issue for consumers. One approach to addressing the issue had been the creation of Medical Savings Accounts or MSAs (sometimes also referred to as Flexible Spending Accounts or Healthcare Spending Accounts) for members of a group (such as employees under an employer healthcare plan). Such accounts permit a member to contribute money (usually on a pre-tax basis) and thereafter obtain reimbursement from the account for various medical or other eligible expenses.
The administrative burden in managing an MSA plan can be high. As an example, a reimbursement form is typically completed by the member and submitted to the plan administrator. The administrator determines the eligibility of the member, the current balance in the member's account, and the eligibility of products or services purchased. If the purchase is eligible, a reimbursement is made to the member. Given the multiple steps involved, significant time and cost are required for each transaction.
The Internal Revenue Code and regulations issued thereunder govern most aspects of MSAs, including products and services eligible for reimbursement. Systems have been developed to permit the use of debit cards, so that a member can obtain reimbursement (and pay a medical services provider directly) from the account at the time of purchase. The debit card is used at a POS or medical provider terminal to access the member's account, and if there is a sufficient balance in the account, to pay for the product or service at the time of purchase by debiting the account.
However, many products eligible for reimbursement, such as over-the-counter (OTC) medicines, are available at drugstores, pharmacies, grocery stores, and other retail establishments, and neither the member purchasing the product nor the retail clerk handling the transaction are familiar with rules that govern eligibility. As a results, members often do not obtain reimbursement for products that would otherwise be eligible when purchased.